Reforming Physician Payment Report of a Conference (1984) / Chapter Skim
Currently Skimming:
The Impact of Changes in Payment Methods on the Supply of Physicians' Services
The Impact of Changes in Payment Methods on the Supply of Physicians' Services
Pages 44-62
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From page 44... ...
Not only are businesses and governments actively seeking ways to save money by restructuring their insurance programs, but the market for physicians ' services is becoming increasingly competitive as the number of physicians grows. These two forces seem increasingly likely to lead to changes in the ways that physicians are paid, perhaps as a result of government policy or perhaps as a result of market pressures to adopt innovative payment methods.
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From page 45... ...
Given these qualifications, what does existing research tell us about the impact of the payment system on physicians' specialty choices, location choices, productivity, and output mix? It tells us quite a lot ~ but data problems and the complexity of the existing payment system leave some important issues unresolved.
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From page 46... ...
Using multiple regression analysis, the authors estimated that a medical service area in which physicians average gross earnings were ten percent above average experienced net immigration of physicians who were not board certified that was 34 percent above average. In a study with comparable results, Hadley ( 1978 )
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From page 47... ...
A notable exception was Ramaswamy and Tokuhata's 1975 study of variations in the number of physicians per capita in the counties of Pennsylvania. The authors developed county-level price indices from Blue Shield claims data and so had rather good data on prices.
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From page 48... ...
Consequently, we really have very little idea of how long it would take for physicians to respond to a change in the payment system that made one area more attractive or less attractive financially. As the market for physicians' services becomes more competitive we would expect that financial concerns would play a larger role in physicians' location choices, so even good historical evidence might not accurately predict the response in the future.
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From page 49... ...
Because it looked at changes over time, the Lee study was somewhat less vulnerable to problems due to inability to measure all the relevant non-financial factors. Despite their quite different approaches, the two studies reached nearly identical conclusions about psychiatry: an increase in psychiatrists ' incomes would lead to a statistically significant, but very small increase in the number of psychiatry residents.
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From page 50... ...
The connection is that efficiency in the broad sense requires efficiency in the narrow sense, but efficiency in the narrow sense does not guarantee efficiency in the broad sense. Efficiency in the narrow sense entails producing a given output as inexpensively as possible.
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From page 51... ...
It also may entai 1 hard decisions about where resources should be focused, since what is possible depends on how resources are divided among individuals' and society's competing goals. St it 1, eff iciency in this broad sense requi res ef f iciency in the narrow sense.
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From page 52... ...
They suggest that physicians in solo practice are less productive and earn less than physicians in small groups. Part of the dif ference in product ivity is due to the greater use of aides and equipment by group physicians, but group physicians appear to be more Table 1 Output and Net Revenue per Hour by Practice Organization Total Patient Visits Net Income Per Type of Pract ice Per Hour Hour 1 MD 2.17 $33.18 2-3 MDS 2.48 35.03 4-7 MDS 2.52 37.32 8 + MDS 2.21 34.
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From page 53... ...
If in fact the pattern in Table 1 ref lects variat ions in ef f iciency rather than variations in case mix or the characteristics of physicians who choose different practice styles, then increasing ef ficiency in groups may be one way for physicians to maintain net incomes even though the market has become increasingly compet it i vet The nature of the incentive problem is that in large groups the effect of a physician being inefficient can be spread throughout the group. For example, if a physician insists on overstaff ing his or her practice with aides or underutilizing aides, if costs are shared, every physician in the group will experience a rather small drop in net income.
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From page 54... ...
Indeed, savings due to reduced use of hospital services appear to be the pr incipal way that successful prepaid plans lower costs ~ Luf t, 1978 ~ . Making sure that these incent Ives af feet the behavior of physicians in the group can be a difficult task, given the dilution of economic incentives that occurs in large groups.
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From page 55... ...
Limits on an insurer's allowed fees (often called reasonable fees) may expose patients to considerable out-of-pocket expense if physicians charge more than the allowed fee.
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From page 56... ...
For some physicians, revenues in the private market are high enough so that only a very significant increase in Medicaid fees would make treating Medicaid patients financially attractive. These physicians will, except for occasional acceptance of a Med icaid pat lent for humanitar iar~ reasons, assent tat ly opt out of the Medicaid program.
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From page 57... ...
Such intermittent eligible lity makes them unsuitable candidates from the viewpoint of prepaid plans. Medicare beneficiaries could be candidates for prepaid plans, but many of the elderly have established physic~an-patient relationships, reducing the attractiveness of prepaid plans ~ especially in the absence of financial incentives to join)
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From page 58... ...
Physicians in small groups see more patients and earn more per hour than their counterparts in solo practice or in large groups. Compensation methods within groups also appear to af feet productivity, as salaried physicians work fewer hours and see fewer patients per hour than physicians paid on an incentive basis.
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From page 59... ...
Analyses of participation in various insurance programs also show that the complex mix of private insurance, public insurance, and self payment forms a system, albeit an unplanned one. Changes in one component have repercussions for the rest of the system.
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From page 60... ...
Greenlick, M.R., et al., ~Kaiser-Permanente's Medicare PIUS Project: A Successful Medicare Prospective Payment Demonstration'. Health Care Financing Review 4 (Summer 1983~:85-97.
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From page 61... ...
Mechanic, D., The Organization of Medical Practice and Practice Orientations Among Physicians in Prepaid and Nonprepaid Primary Care Settings Medical Care, 13 (March, 1975~:189-204. Paringer, L., Medicare Assignment Rates of Physicians: Their Responses to Changes in Reimbursement Policy, Health Care Financing Review 1 (1980~:75-91.
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From page 62... ...
, 211-246 . Sloan, F.A., Steinwald, B., Physician Participation in Health Insurance Plans: Evidence on Blue Shield, ~ Journal of Human Resources 13 ( 1978 )
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